Bhadra International (India) Pvt. Ltd. vs Airports Authority of India 2026 INSC 6 - Arbitration - Ineligibility

Arbitration and Conciliation Act 1996- Section 12(5)- The ineligibility of an arbitrator can be waived only by an express agreement in writing. The requirement of the waiver to be made expressly in the form of agreement in writing ensures that parties are not divested of their right to object inadvertently or by procedural happenstance. (Para 89-90) A notice invoking the arbitration clause under Section 21, a procedural order, submission of statement of claim, the filing an application seeking interim relief, or a reply to an application under Section 33 cannot be countenanced to mean “an express agreement in writing” within the meaning of the proviso to sub-section (5) of Section 12. (Para 96) The arbitrator upon entering reference and at the very first hearing, to ensure from the parties that they are willing to participate in the proceedings and to insist upon a written agreement waiving the requirement of Section 12(5) (Para 121)

Arbitration and Conciliation Act 1996- Section 12(5)- A challenge to an arbitrator’s ineligibility could be raised at any stage because an award passed in such circumstance is non-est, i.e., it carries no enforceability or recognition in law - When an arbitrator is found to be ineligible by virtue of Section 12(5) read with the Seventh Schedule, his mandate is automatically terminated. In such circumstance, an aggrieved party may approach the court under Section 14 read with Section 15 for appointment of a substitute arbitrator. Whereas, when an award has been passed by such an arbitrator, an aggrieved party may approach the court under Section 34 for setting aside the award. (Para 123-iv)

Arbitration and Conciliation Act 1996- Section 18 - The principle of ‘equal treatment of the parties’ means that the parties must have the possibility of participating in the constitution of the arbitral tribunal on equal terms -Equal participation of the parties in the process of appointment of arbitrators entails that the contracting parties have an equal say in the constitution of the arbitral tribunal. Such participation eliminates the likelihood of challenges to the arbitrator at a later stage. It is needless to say that independence and impartiality in arbitral proceedings would be served only when the parties participate equally at all stages - The principle of party autonomy does not obliterate the principle of equal treatment of the parties, either in the procedure for appointment of arbitrators or in the arbitral proceedings. The exercise of party autonomy has to be in consonance with the principles of equal treatment of parties, which impliedly include the independence and impartiality of arbitrators. (Para 32-39)

Arbitration Law - In the absence of any contrary stipulation in the agreement, arbitral proceedings commence when a notice invoking arbitration is received by the respondent.  (Para 49)

Arbitration Act - Section 21 - The notice under Section 21 is an expression to set the arbitration agreement into motion upon arising of disputes between the parties. The section states that the date of commencement of arbitration would be the date on which the recipient receives the notice from the claimant that the dispute be referred to arbitration. The notice acts as a communication that the sender is aggrieved and seeks to invoke the arbitration agreement. It does not, by itself, operate as consent to any appointment to be made in the future. (Para 70)